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Required: Use the reciprocal method to allocate the service department costs to the production departments. (Matrix algebra is not required.) Note: Amounts to be deducted should be indicated by a minus sign. Do not round intermediate calculations.

Required: Use the reciprocal method to allocate the service department costs to the production departments. (Matrix algebra is not required.) Note: Amounts to be deducted should be indicated by a minus sign. Do not round intermediate calculations.

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter7: Allocating Costs Of Support Departments And Joint Products
Section: Chapter Questions
Problem 30E: A company uses charging rates to allocate service department costs to the using departments. The...
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Memorial Services, Incorporated (MSI) has three service departments (IT, Accounting, and HR) and two production departments (West and East). The usage data for each of the service departments for the previous period follow: IT IT Accounting 0% HR West East 20% 40% 40% Accounting HR 0% 10% 0% 40% 60% 10% 60% 20% The direct costs of the service departments in the previous period were $86,750 for IT, $99,000 for Accounting, and $112,500 for HR. Required: Use the reciprocal method to allocate the service department costs to the production departments. (Matrix algebra is not required.) Note: Amounts to be deducted should be indicated by a minus sign. Do not round intermediate calculations. Answer is not complete. Allocation IT Accounting Service department costs $ 86,750 HR $99,000 $ 112,500 West East IT allocation (86,750) 34,700 34,700 Accounting allocation (99,000) 39,600 59,400 HR allocation (112,500) 67,500 x 22,500 x Total costs allocated $ 0 $ 0 $ 0 $ 141,800 $ 116,600
Transcribed Image Text:Memorial Services, Incorporated (MSI) has three service departments (IT, Accounting, and HR) and two production departments (West and East). The usage data for each of the service departments for the previous period follow: IT IT Accounting 0% HR West East 20% 40% 40% Accounting HR 0% 10% 0% 40% 60% 10% 60% 20% The direct costs of the service departments in the previous period were $86,750 for IT, $99,000 for Accounting, and $112,500 for HR. Required: Use the reciprocal method to allocate the service department costs to the production departments. (Matrix algebra is not required.) Note: Amounts to be deducted should be indicated by a minus sign. Do not round intermediate calculations. Answer is not complete. Allocation IT Accounting Service department costs $ 86,750 HR $99,000 $ 112,500 West East IT allocation (86,750) 34,700 34,700 Accounting allocation (99,000) 39,600 59,400 HR allocation (112,500) 67,500 x 22,500 x Total costs allocated $ 0 $ 0 $ 0 $ 141,800 $ 116,600
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